Fitch Affirms Progressive's Ratings; Outlook Stable

CHICAGO--(BUSINESS WIRE)--Fitch Ratings has affirmed the following ratings for The Progressive
Corporation (NYSE: PGR):

--Issuer Default Rating (IDR) at 'A+';

--Senior debt ratings at 'A' and;

--Junior debt at 'BBB+'.

Fitch has also affirmed Progressive's operating subsidiaries' Insurer
Financial Strength (IFS) ratings at 'AA'. A complete list of ratings
follows the end of this release. The Rating Outlook is Stable.

Progressive's overall GAAP combined ratio was 93.5% for full year 2013,
an improvement over full year 2012's result of 95.6%. Embedded in PGR's
culture is obtaining a GAAP calendar year combined ratio of 96% or
better. In fact, the company's annual dividend to shareholders and
employee bonuses are based on obtaining this goal.

Fitch continues to view Progressive as one of the strongest underwriters
among major property/casualty companies, and recognizes the company's
history of strong underwriting margins and stability. In fact, PGR's 5
and 10-year statutory combined ratio average is 93.1% and 91.1%
respectively; and over the last 46 years, PGR has had a combined ratio
in excess of 100% only three times.

Fitch believes that Progressive's financial leverage, as measured by
total debt to total capital, will remain within a reasonable range for
the rating category in the near term. The company's financial leverage
at year-end 2013 was 23.4%.

Progressive's profitability promotes strong interest coverage. GAAP
fixed-charge coverage at year-end 2013 was 12.9x up from year end 2012
of 9.2x. Similarly, statutory interest coverage improved to 9.9x at
year-end 2013 compared to 7.9x for prior year-end. Fitch believes that
GAAP fixed-charge coverage will range from high single digits to low
double digits over the near term.

Fitch's ratings also reflect the limited product diversification and
high notional operating leverage of the company. However, Fitch notes
that diversification without a sound business strategy would be a credit
negative.

Progressive's high notional operating leverage potentially exposes
capital to unexpected pricing errors. This exposure is further
exacerbated by the company's monoline nature, which exposes the company
to auto industry specific risks. Thus, a sudden change in fortunes for
auto writers, particularly in a manner that is currently difficult to
predict or model, would potentially have a greater negative impact on
Progressive's capital than it would for less leveraged and more
diversified companies.

RATING SENSITIVITIES

Factors that could lead to a ratings downgrade include the following:

--Obtaining a GAAP calendar year combined ratio of 99% or higher.

--Failure to maintain a Prism score of 'Very Strong' or better. Based on
year-end 2012 data PGR's Prism score was 'Extremely Strong.'

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